Yahoo Partners With SBC to Rejoin ISP Market

Yahoo Inc. has partnered with telecommunications giant SBC Communications Inc. to offer unlimited Internet access to subscribers of the Baby Bell in a move to combine access and portal services.

The SBC Yahoo Dial service, introduced this month, costs $21.95 a month, priced competitively to lure customers from other Internet service providers, including No. 1 AOL.

"Access is a new alternative revenue stream for Yahoo and a high-priority business for us going forward," said Helena Maus, public relations manager for Yahoo, Sunnyvale, CA. "This agreement and others like it help position the company for profitable, diversified growth."

Maus said Yahoo is also in discussions with other undisclosed access providers. The strategy is to leverage the portal's and its partner's substantial base of users. San Antonio-based SBC is the nation's leading DSL Internet provider.

"We believe that there is dissatisfaction in the marketplace with AOL and other access offerings," Maus said.

SBC Yahoo Dial will offer dial-up and, later this summer, DSL access, a customized portal and browser, and content and services across categories like finance, shopping and sports. Membership includes 10 sub-accounts for the family, with different e-mail addresses and home pages. The first-month subscription is free.

The two primary ways to order the service are through Yahoo and SBC's sales channel. Customers will receive an SBC Dial or DSL welcome kit with an enclosed software-encoded CD after ordering the product via any channel.

Customers also will be able to download the software over the Internet later this summer.

This partnership is Yahoo's second foray into the Internet access market. The company in spring 2000 partnered with now-defunct ISP Spinway.com to sell packages to retailers and other marketers seeking to offer Internet access. Clients signed on included Kmart Corp.'s BlueLight.com, Costco, Barnes & Noble.com and Spiegel Catalog Inc. Yahoo's deals with those companies were soon discontinued.

"While those efforts drove a significant number of subscribers, the key differences between those access plays and our agreement with SBC is that our new agreement involves a strategic product and marketing partnership and a differentiated product with premium services integration," Maus said.

Ambitious online marketing is planned to promote the new service to Yahoo and SBC users.

"Our reach ... allows us to target our marketing efforts directly to potential customers of the co-branded offering," said Grant Winfrey, senior director of marketing at Yahoo. "Yahoo has developed and will be refining custom targeting models to specifically reach those consumers appropriate for the Dial or DSL products."

The new ISP, for instance, will be promoted on the highly visited Yahoo home page and across the network. This includes banners and buttons.

Though Winfrey would not disclose specifics, he said SBC will break online, direct mail, radio and print advertising in select geographic markets to push the ISP. Yahoo will be featured prominently in all ads. SBC also will promote the service on its SBC.com site home page.

Yahoo will share in recurring monthly subscription fees for all new SBC dial-up and DSL subscribers and all existing SBC subscribers who switch to the service. SBC will share in advertising and subscription services revenue generated by Yahoo from the joint subscriber base.

Of course, Yahoo expects stiff resistance from entrenched ISPs. AOL already is under assault from Microsoft Corp.'s new marketing campaign for its MSN Internet access service. Plus, Kmart has reintroduced a cheaper BlueLight.com ISP service costing only $8.95 a month.

Still, Maus is confident there is room for one more service in a world that is slowly taking to broadband.